The biggest cryptocurrency asset trading platform, Binance, and its American partner BAM Trading and founder Changpeng Zhao (CZ), have been charged by the U.S. Securities and Exchange Commission (SEC) for breaking several securities laws.
The SEC alleges that despite publicly stating limits, Binance and Zhao permitted high-value U.S. clients to trade on Binance.com. Additionally, they contend that Binance.US was not as independent as was promised and that customer assets were mismanaged.
The SEC also charges Binance and BAM Trading with running unlicensed broker-dealers, clearing agencies, and securities exchanges. Inconsistent practices, conflicts of interest, and a lack of transparency are highlighted in the complaint. The lawsuit has been filed in the District of Columbia’s U.S. District Court.
However, Crypto attorney James Murphy, also known as MetLawMan on Twitter, has clarified the reasoning behind Binance’s aggressive stance towards the SEC. The defendants filed a motion to accuse the SEC of acting unethically.
Binance accused the SEC of breaking court regulations by making false remarks outside of court. According to Binance, the SEC is allegedly trying to hurt the trading firm deliberately. Binance asked the court to uphold the relevant laws and order the SEC to follow them, arguing that the jury pool is tainted and the SEC’s actions hurt US customers.
According to Binance, the SEC misled the public by claiming that emergency relief was necessary, alleging that CZ, the company’s founder, had mixed up and misdirected customer funds and that the order was essential for safeguarding investor assets. When questioned by the judge, Binance claims that the SEC attorneys could not present any proof of CZ diverting or combining customer assets.
According to MetaLawMan, it is significant that Bill McLucas and George Canellos, who both led the SEC’s Division of Enforcement in the past, have also signed these charges of wrongdoing. These lawyers’ accusations of unethical behaviour will undoubtedly not go unnoticed by SEC officials.
MetaLawMan said: “The SEC will come back swinging. They will argue their press release was fine because: (a) they did not concede what Binance says was conceded; (b) they are allowed to repeat allegations from their own complaint; and (c) Binance’s own post-hearing statements were improper.”
MetaLawMan concludes that this is just the beginning of the fight for Binance against the righteousness of the SEC. Like Ripple, Binance is in it for good and is not backing away from the battle.
In 2020 the SEC filed a lawsuit against Ripple Labs Inc., Ripple CEO Brad Garlinghouse, and Ripple co-founder Chris Larsen on the grounds that they sold XRP, the cryptocurrency linked to Ripple, in an unregistered securities offering. The SEC’s case against Ripple is noteworthy because it raises critical issues regarding how cryptocurrencies are classified and governed in the United States. A judgment by Judge Torres is expected anytime soon now, with many claiming settlement is currently out of the question.